Friday, July 25, 2008

Returns to Double Majors

Our department offers several double majors, the most popular being an agricultural economics & accounting double major. Only our most dedicated and brightest students pursue this degree, as the courses are tougher and the student foregoes all electives.

For those unfamiliar with double majors, it is not two undergraduate degrees. I tell students its like 1.5 undergraduate degrees. Our graduates with ag econ / accounting double major basically have 75% of an ag econ and 75% of an accounting degree - in my opinion. They have to take additional hours, usually about ten hours but rarely more than 15, and forego all electives if they wish to graduate in a timely manner.

Is it worth it? A new study published in the Economics of Education Review titled, "Double your major, double your return?" provide some insights. Using a large and detailed dataset, and a conventional regression equation, the authors estimate the relationship between obtaining a double major and subsequent salaries.

As with all salary regressions, the reader should note that a positive impact of double majors on salary could be due to the enhanced learning from the double major, due to the the type of people who choose to pursue double majors, or both.

For agricultural economics advisors, below are the relevant highlights. The paper does not contain data on ag econ / ag-business degrees, but business degrees are close substitutes for these degrees, so the study results are useful to advisors like myself. These results control for individuals who pursue a second [whole] degree and do not include those who later obtain a graduate degree.

Across all students and majors, obtaining a double major is positively related to subsequent salaries, increasing salary by 2-3%.

This small premium is an average, an average of many different double majors, and the variability around the average is large.

Having a double major in two business fields (e.g. management and accounting) increases salary by 10%, compared to a single business degree! This is relevant to ag econ / accounting double majors, and this premium makes it worth considering such a degree.

Often, when students show interest in double majors, I suggest they focus their interests instead on a graduate degree. Undergraduates can sometimes take hours that will be credited towards a subsequent degree, like the excellent agricultural economics program at the University of Florida. Indeed, the study shows that a student currently seeking a single business major can (a) pursue a double major in another business degree for a salary premium of 10% or (b) an MBA with a salary premium of 47%! Moreover, the authors show that if one plans to later obtain a graduate degree, there is no reward for obtaining a double major.

In the future when advisees ask me about double majors in areas like agricultural economics and accounting, I plan to suggest it could increase their salary by 10% - if they can do well in the double major. However, I also urge them to consider going to graduate school instead.

Of course, there are other reasons to pursue a double major. Some students may be particularly interested in two areas, or may want to explore different subjects to help them identify a degree best fit for their personality.

Students not academically gifted could be harmed from pursuing a degree beyond their capabilities. Just because people with the last name of "Trump" tend to be billionaires does not mean that I should change my name to "Bailey Trump" and expect anything of benefit!

A sentence in the first paragraph struck me as odd: they state 25% of college graduates have more than one undergraduate major. That, simply, just does not seem true.